MPSC Approves $27M Rate Increase for Consumers Energy Electric Customers

The Michigan Public Service Commission approved Wednesday a rate increase of $27,118,000 for Consumers Energy’s electric operations, which is a nearly 88% reduction from the $225 million Consumers had originally requested.

A typical residential customer who uses 500 kilowatt hours of electricity per month will see an increase of 59 cents (0.64%) on their monthly bill starting in January 2022.

According to the Michigan Public Service Commission, Consumers Energy had sought an increase to fund capital investments in its distribution system and to make up for a decline in sales revenue, while also presenting costs related to the company’s plans for 300 megawatts of solar power generation.

The Michigan Public Service Commission says the rate increase will fund efforts by Consumers Energy to improve its reliability.

The commission also approved $94.4 million for Consumers to increase its tree trimming and line clearing so that the company’s entire system is cleared every seven years and approved $63.4 million Consumers projects it will need for outage restoration efforts.

The Michigan Public Service Commission says Consumers Energy had sought approval for nearly $128 million in 2021 and 2022 capital costs for the company’s Washtenaw Solar Energy Project near Ann Arbor, which the company plans to use to increase its sources of renewable energy as part of its goal to achieve net-zero carbon emissions by 2040. While the Commission disallowed the projected costs, citing a lack of specific evidence in Consumers’ filing, the contracts were approved by the commission Nov. 18. The commission said it would be more appropriate to review the costs in Consumers’ next general rate case. The Commission also deferred consideration of a number of costs associated with generation assets that are the subject of the company’s pending integrated resource plan.

The Michigan Public Service Commission also disallowed:

  • $49 million in costs for the utility’s vehicle fleet, finding that the company failed to demonstrate that historic spending was reasonable and prudent. The Commission directed Consumers to provide more detailed information about its projected fleet expenditures and its acquisition approach going forward, including an analysis incorporating the benefits and costs to ratepayers; how Consumers accounts for fleet depreciation, and how the company’s move to decrease average vehicle age affects costs to ratepayers, and to consult with MPSC Staff on the company’s fleet spending.
  • $25.7 million in contingency budgeting for several capital expense projections for 2021 and 2021, noting the Commission’s longstanding opposition to including uncertain contingency costs in customer rates is unjust and unreasonable.
  • $24 million Consumers sought for the acquisition and development of future company-owned solar projects, finding the costs speculative and without certainty the properties will be used to provide utility service and may provide the utility with an unreasonable advantage over third-party project developers.
  • $10 million in capital expenses related to the company’s Standish and Neely/Hooper battery storage projects, saying that while the Commission remains committed to integrating clean, renewable technologies supported by battery storage into the grid, the costs here were unreasonably expensive for the benefits identified by the company.

The Michigan Public Service Commission also approved $16.5 million for a two-year extension of Consumers’ PowerMIDrive pilot that funds rebates and supports the installation of electric vehicle chargers at homes and for public use, as well as an increase in capital funding for its PowerMIFleet pilot program for commercial electric vehicle adoption. The Michigan Public Service Commission also directed Consumers to include a more robust plan to move beyond pilots to a permanent program in its next rate case to address Consumers’ stated goal to support 1 million electric vehicles on Michigan’s roads by 2030.

Consumer’s Energy also announced Wednesday that their new economic development rate was approved by the Michigan Public Service Commission, or MPSC, to help grow the state’s economy by attracting and retaining major manufacturing companies.

The innovative rate is intended to attract both new business to Michigan and encourage existing businesses to expand their operations in the company’s service territory.

Consumer’s says it is targeted towards large businesses with 35 MW or more of new electric load, the economic development rate is especially well suited to attract energy intensive activities such as electric vehicle supply chain or semiconductor manufacturing opportunities to the state.

They say they have a strong history of supporting industrial customers and helping make Michigan an attractive, competitive option for new businesses to invest and grow.

“We appreciate the MPSC’s quick approval on our economic development rate,” said Brian Rich, Chief Customer Officer at Consumers Energy. “Consumers Energy is committed to ensuring Michigan’s prosperity by helping manufacturing companies to adapt, grow and thrive. We want to go the extra mile to bring new jobs to Michigan.”

According to Consumer’s Energy, the new rate with the state’s cost-based rate requirements and means existing utility customers won’t pay more to attract new businesses to Michigan.

Other details of the rate can be found below:

  • Open to new customers or existing full service primary customers expanding their permanent operations to add new electric load
  • Requires 35 MW or more of new load
  • Minimum 15 year contract term
  • 4-5 cents per kilowatt/hour